Both stretch and shrink sleeve labels are emerging as a desirable form of product labeling and decoration due to the 360-degree message and branding that helps the product attain a high impact presentation on the store shelf. Sleeve labeling continues to be one of the world’s most dynamic label formats of product decoration, although overall growth is slowing from its earlier heights as the technology moves towards maturity. Globally, sleeve labeling today represents the third-largest labeling technology, after pressure-sensitive and traditional glue-applied labels. It claims 19% of global label volumes, and AWA research shows that it will continue to grow at around 4.0% p.a. to 2023. The end-use market sectors for sleeve labels are primarily beverage (64%), food (16%), household chemicals (10%), and health and personal care products (5%).
The different sleeve label formats
Sleeve labeling involves different formats – heat shrink TD, stretch, ROSO™ MD (‘roll-on shrink-on’), and RFS MD sleeving – which in turn serve different end-use markets and involve format-specific application characteristics. In terms of base materials, sleeve labeling is primarily a film-based format, with 45% usage of PVC film, 34% PET-G, and 9% OPS.
For heat shrink TD sleeves, today’s most popular format, pre-printed film is applied as a loose tube over a container, heat-shrunk to fit the container contours, and held in place only by minimal contact with the container’s surface. For stretch sleeves, a pre-printed film is applied in tube form by stretching over the container and held in place simply by tension. ROSO™ MD and RFS MD sleeves – hybrids of heat-shrink sleeves and wraparound labels – are applied in a flat web which is seamed at the time of application, and then shrunk after being fixed to the container.
Heat shrink TD sleeves: most popular choice
In terms of volume, growth, and popularity with brand owners, heat shrink TD sleeving is the most successful format, with an 89% share of the global sleeve market. It uniquely provides the 75% shrinkage or distortion capability that complex container shapes demand and is today widely in use in consumer container packaging – particularly on the specially-contoured plastic containers for on-the-go drinks and snacks. For brand owners, heat shrink sleeves deliver a much-expanded opportunity for decoration and mandatory information, compared to other labeling methods – including other sleeving formats. They offer head-to-toe decoration for high, stand-out visibility, on the retail shelf, as well as a 360⁰ head-to-toe printable area, all-round protection of container contents and the option for over-the-cap secure container sealing. It is also worth noting that many heat shrink sleeve labels today are perforated, so consumers may separate them from the container after use, to simplify effective recycling of both container and sleeve.
In 2020, of the estimated total volume of 12,696 million square meters of sleeve labels, an estimated 11,296 million square meters were in the heat shrink TD sleeve format – growth of 3.1% over prior year, and 89% of total sleeve usage. This was slower than in previous years, but is expected to pick up again to a CAGR% of 4.2% between 2020 and 2023.
Alternative sleeving choices
In 2020, sleeving technology sales also accounted for 914 million square meters of stretch sleeve labels (2.0% growth): 432 million square meters of ROSO™MD sleeve labels (2.9% growth); and 54 million square meters of RFS MD sleeve labels (3.2% growth).
Globally sleeve labels are expected to grow at a higher rate than the total label market between 2020 and 2023, but this is not the case for all regions. Asia is the leading region for sleeve labels with a 66% share of the global market, followed by Europe at 19%. Across all the geographical regions, heat shrink sleeves claim the highest market share of all the sleeve formats.
By region, North America grew the fastest, at 3.8%, with Asia growing at 2.9%, Europe at 3.1%, South America at 2.5%, and Africa and the Middle East at 3.6%.
The European region is a leading consumer of sleeve labels, which claim 14% of the overall label market and, in 2020, 19% of the region’s primary product labeling volumes. Sleeve labels are primarily found in the beverage segment (48%), followed by the food segment (28%), and household chemicals (10%). Heat shrink sleeve label volume growth was the highest for all label formats in Europe in 2020 at an estimated 3.5%, while total sleeve label format volumes increased by 3.1%. Forecast growth to 2023 for all labeling technologies is 2.1% p.a., with sleeves forecast at a CAGR of 2.7%.
In North America, the overall label market grew at 3.0% in 2020, driven by high growth in sleeve and pressure-sensitive label technologies. The forward forecast for 2020-2023 suggests an overall annual growth rate of 2.5%, with growth strongest in heat shrink sleeve, ROSO™/RFS MD sleeve and in-mold label technologies.
In 2020, North American sleeve label market volumes are estimated to have grown by 3.8%, and claim an 11% share of the total sleeve label market. Heat shrink sleeve volume growth was estimated at 4.3%, to a volume of 961 million square meters. Stretch sleeve label volumes grew by 2.3% to an estimated 237 million square meters. ROSO™ MD and RFS MD sleeve labels grew by an estimated 3.4% to a total volume of 248 million square meters. The North American market is the leading user of RFS MD sleeve label formats. Sleeve labels are primarily found in the beverage segment (52%), followed by the food segment (23%), and household chemicals (14%).
Asia is currently the world’s largest and fastest-growing label market, with a 45% share of global total label demand. In 2020 sleeve labels claimed a 27% share of it.
The key driver for Asian sleeve label volume demand is the growth in China and India. Beverage is once again the largest end-use sleeve label market in Asia by far, representing 71% of the total, with food and household chemicals both in second place at 10%.
The Asian sleeve label market in 2020 shows a slowdown over 2019. Sleeve label technologies grew by an estimated 2.9% in 2020. This lower growth rate is driven by a decrease in the Japanese heat shrink sleeve label market. Unlike other markets, Asia’s beverage market is heavily dependent on convenience stores and restaurants, which were partly closed or under restrictions in most Asian countries in 2020 because of the COVID-19 pandemic. As beverages represent 71% of the total Asian sleeve label market, the downturn in beverage sales has had a significant impact on the sleeve label market in Asia.
The forward CAGR% forecast for the Asian sleeve label market over the period 2020-2023 is more positive at 4.5%. Along with re-opening of most countries in Asia, the market is expected to recover. In addition, in the household chemical segment growth potential remains as many producers of household chemicals consider changes from IML and pressure-sensitive label formats.
South American label volume growth in 2020 is estimated at 1.6%, and the outlook is for continued moderate growth. The forward forecast for the region in the period 2020-2023 predicts a continuation of moderate growth rates at an annualized growth rate of 1.7%. Key end-use label market segments within the region are food, beverage, health and personal care products, and retail.
Sleeve labels, with a 4% share of the overall South American label market, grew by 2.5% in 2020, with heat shrink TD sleeve volumes growing at the same rate of 2.5%.
Africa and Middle East
In Africa and the Middle East, South Africa, Israel, North Africa, and the Middle East remain the main label markets, and ongoing political and economic issues across much of the region detract from the realization of higher penetration rates for packaged goods and the use of labeled products. Regional growth in 2020 was 3.2%, and forecast overall growth for the label market for 2020-2023 is forecast at 4.0%. Sleeve labeling grew at an estimated 3.6% in 2020.
Beverage is the largest end-use segment for sleeve labels, at 66%, with food in second place at 24% – characteristics of a developing market. Sleeve labels claim just a 10% market share, and while in-mold labels are forecast to be the fastest growing label technology in the region, at a CAGR of 4.3% for 2020-2023, glue applied labels, with a 50% market share in 2020, will continue to account for most additional total label volumes in 2023.
PET, HDPE, and PP containers are widely recycled in Europe, North America, and Asia for extensive, broad-ranging second-life use. As a result, consumer brand companies (and recycling companies) require shrink sleeves that are compatible with the sorting and recycling processes used today around the world; do not reduce the quality of recycled plastics, and do not have an adverse effect on the recycling of the plastic films employed. A recycler will work to remove all materials that he does not want – typically, everything other than the container itself (e.g., cap, sleeve) – and the process often begins with shredding of all the material followed by a bath to separate materials of different densities and remove those not required. Recycling sleeves with plastic containers can be complex, and the increasing use of perforated heat shrink sleeves is contributing to simplification.
Impact of COVID-19
Compared to pressure-sensitive labels, sleeve labels are used in a relatively small number of end-use markets. The influence of COVID-19 has been seen in most end-use segments. Beverage, food, and household chemicals represent the highest market shares in the sleeve label market. The pandemic has significantly affected these key end-use markets. Globally, the food market is more resilient than the beverage sector, and household chemicals have contributed to a significant volume growth in the sleeve label market. The pandemic shows diverse impacts across all the regions, due to different timings of infection, different measures implemented and so on. Despite the regional differences, there are some global trends worth mentioning. Across the value chain, the focus on sustainability remains high in the industry, especially regarding recyclability and films containing recycled content. On the production side, although demand from end users in some segments is increasing, investment in new machines has temporarily decreased, and some installations planned prior to COVID-19 were also delayed. These changes result from the difficulties caused by lockdowns, travel restrictions and the lack of confidence in the future market.
The sleeving technologies are continuing to evolve at all points of their different value chains – and heat shrink TD sleeve labels are enjoying an ever-increasing understanding of the promotional benefits of combining high-quality graphics with complex container geometries on FMCG packaging. For such technically-unique applications, and simpler, less ostentatious sleeve labels, this is a product decoration and identification technology that is here to stay.